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Wednesday, 20 May 2015 11:26

GLOBAL | Should your entire company be covered under Kidnap & Ransom Insurance?

Court Hammer Court Hammer

 

But there is no question that security risks in particular, have been steadily rising over the last decade. Organizations today are being faced increasingly, with the responsibility to consider a wider variety of risks for a greater diversity of employees.

 

Kidnapping has long been on the increase

 

Kidnapping in particular has become all too commonplace over the last 10 years or so. Across all countries, the growing socioeconomic divide and the spread of radical groups around the world has resulted in new security threats to individuals and companies.

 

Whereas in the past kidnappers would typically target high-profile, or high net worth individuals and families and while incidents were limited to a handful of countries, today, travelling employees, children, tourists and volunteer workers among others can easily become targets, while abductions can happen virtually anywhere.

 

Kidnapping threats are swiftly evolving

 

red24, a crisis management assistance company, estimates that up to 40 000 kidnapping for ransom and extortion incidents occur annually. The company also indicates that non-traditional forms of kidnapping are posing an increasing global security risk. Threats today include a wide variety of physical cases, as well as a growing number of virtual, or cyber-based crimes.

 

A quick look at the Global Incident Map reveals virtually in real time, a wide variety of kidnapping incidents that have been recently reported, while NYA International provides a comprehensive analysis of the Global Kidnap for Ransom situation through 2014 to date.

 

Employers need to re-evaluate employee safety

 

Protecting only selected employees with Kidnap and Ransom insurance (termed by insurance brokers as ‘K&R insurance’) is no longer enough because virtually any employee could be a target.

 

“It is vital that today, K&R insurance be obtained on a blanket basis” says Coert Knoetze, a prominent broker who serves key organisations active on the African continent.

 

“Anyone with a crucial role within the company could be a target. Think about the PA – she is most likely in possession of highly sensitive information and her role is central to the efficient running of the company, so she could quite easily be a target. A threat can be far closer to home than one might imagine.” He says.

 

The size of the company does not matter as kidnappers are likely to abduct anyone that they think could fetch a ransom. In addition to gleaning sensitive information in high profile cases, more opportunistic criminals are looking for ways to simply make a buck.

 

Planning and prevention strategies need to consider all potential scenarios in order to effectively reduce an organisations risk exposure and it often pays to engage a specialist crisis prevention consultant who is able to accurately identify risks.

 

Not all K&R Insurance Policies are made equal

 

The cost of a kidnap can be devastating to both individuals and the companies that they work for.

 

In addition to there being very few brokers with the knowledge to assist employers with the right advice in this area, the insurance products available vary extensively.

 

It is therefore essential to ensure that you partner with a broker who is both underwriter agnostic, and knowledgeable enough in this specialised area, to tailor the correct cover for the specific needs of the client. Be sure of the precisely what cover is in place and update cover as the business grows or operations evolve.

 

What should ideally be covered by comprehensive K&R insurance cover?

 

  • Employer training – to enable the client to correctly manage staff travelling to dangerous locations
  • Reimbursement – cover for any losses related to the incident incurred by the insured. Such losses can include ransom monies, loss of ransom monies, loss of intellectual property & other assets, accidental death, dismemberment, judgements & legal liabilities, medical care, evacuation & transport, counselling etc.
  • Fees and Expenses – cover for the cost of the consulting company hired to manage the case, as well as negotiators.

 

K&R insurance could become the new normal

 

Taking out Kidnap and Ransom cover could become more mainstream business practice in the years to come. As threats evolve to include both physical and online infractions, more companies will be looking to manage these risks pro-actively to protect themselves against any losses.

 

Brokers and insurance agents will accordingly, need to become more knowledgeable regarding the various types of cover available. Instead of relying solely on specialist brokers to manage K&R cover, insurance brokers will increasingly need to think about playing a more integral role in assisting their clients to manage risk in a more comprehensive manner.

 

Collaboration and knowledge sharing is the way of the future in virtually all facets of business, including insurance. Broker networking opportunities such as that which United Global Brokers provides, which enables collaboration across borders and disciplines, will continue to be a highly valuable resource for those brokers who wish to offer their clients the best level of service across the board.

 

In the words of Niccolo Machiavelli -

 

"All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer."

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